Go Digit General Insurance IPO Opens for Subscription

Go Digit General Insurance Limited’s Initial Public Offering (IPO) opens today, Wednesday, May 15, and will remain open for subscription until Friday, May 17. The IPO aims to raise ₹2,614.65 crore through a combination of a fresh issue of shares and an offer-for-sale (OFS). The fresh issue comprises shares worth ₹1,125 crore, while the OFS involves the sale of 54,766,392 equity shares by the promoters and other shareholders.

Anchor Investors and Price Band

On Tuesday, May 14, Go Digit General Insurance secured ₹1,176.59 crore from anchor investors by issuing 4,32,57,009 equity shares at ₹272 per share. Prominent domestic and international institutions participated, including Fidelity Investment Trust, Goldman Sachs, ACM Global Fund, ITPL Invesco India Mutual Fund, Custody Bank of Japan, Schroder International, East Spring Investments India, SBI Mutual Fund, ICICI Prudential Mutual Fund, Axis Mutual Fund, Mirae Asset Mutual Fund, Ashoka WhiteOak Mutual Fund, Malabar Mutual Fund, and Steadview Capital Mauritius Ltd.

The IPO price band is set between ₹258 and ₹272 per share, with a face value of ₹10 per share. The lot size is 55 equity shares, and investors can bid in multiples of 55 shares thereafter.

Allocation and Use of Proceeds

The allocation of the issue is as follows: 75% reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 10% for retail investors. The net proceeds from the fresh issue will be used to support Go Digit’s ongoing business operations and to fund proposed activities as outlined in the prospectus. Additionally, the company expects the equity share listing to enhance brand awareness and reputation.

Company Background and Financial Performance

Founded in December 2016, Go Digit General Insurance offers a diverse range of insurance products, including motor, health, travel, property, marine, and liability insurance, among others. The company has a strong distribution network with approximately 61,972 partners and 75 offices across 24 states and union territories in India. As of December 31, 2023, Go Digit has implemented 473 active bots to automate various internal functions and operations, and the company’s workforce grew to 3,957 employees.

In FY23, Go Digit demonstrated robust growth, with Gross Written Premiums (GWP) increasing to ₹7,243 crore, a 38% rise from FY22, reflecting a CAGR of 49% since FY21. Net premium rose by 41.37% to ₹5,909 crore. The company reversed its fortunes by achieving a profit of ₹35.5 crore in FY23, following a loss of ₹295.85 crore in FY22. The combined ratio improved to 107%, indicating enhanced underwriting profitability, despite the challenges faced over the past years.

Celebrity Backing and Market Potential

Go Digit is backed by prominent figures such as cricket star Virat Kohli, who invested ₹2 crore for 2.67 lakh shares in 2020, and his wife, actress Anushka Sharma, who invested ₹50 lakh. This endorsement has significantly boosted the company’s visibility.

According to industry data from IRDAI and Redseer research, the non-life insurance market in India generated about US$33.30 billion in Gross Written Premiums in FY23, with a CAGR of 11.2% from FY18 to FY23. Go Digit aims to capitalize on this growth by expanding its customer base and product offerings.

IPO Grey Market Premium (GMP) and Recommendations

The Go Digit IPO has attracted considerable attention in the primary markets. As of today, the grey market premium (GMP) for Go Digit shares is approximately ₹47 to ₹50 per share. This suggests that the shares might list at around ₹319 per share, a 17.28% premium over the upper end of the IPO price band.

Analysts at Master Capital Services Ltd recommend subscribing to the IPO, citing significant growth potential and margin expansion prospects in the medium to long term.

Key Dates

-Subscription Period: May 15, 2024 – May 17, 2024

– Allotment Date:  May 21, 2024

– Listing Date: May 23, 2024

Investment Details

Price Band: ₹258 to ₹272 per share

Lot Size: 55 shares

Minimum Investment: ₹14,960 for retail investors

Lead Managers and Registrar

ICICI Securities Limited, Morgan Stanley India Company Pvt Ltd, Axis Capital Limited, HDFC Bank Limited, IIFL Securities Ltd, and Nuvama Wealth Management Limited are the book-running lead managers for the IPO, with Link Intime India Private Ltd acting as the registrar.

Investors keen on the IPO are encouraged to consider the company’s financial performance, growth potential, and market position before making their investment decisions.

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